Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12

GOLDEN PHARMACEUTICALS, INC.
(Name of Registrant as Specified in Its Charter)

---------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.

1) Title of each class of securities to which
transaction applies:
2) Aggregate number of securities to which transaction
applies:
3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule
0-11 (Set forth the amount on which the filing fee is
calculated and state how it was
determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:

[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.

1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
2
GOLDEN PHARMACEUTICALS, INC.

710 14TH STREET
GOLDEN, COLORADO 80401
----------------------------------

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 13, 1998
----------------------------------

To the Shareholders of Golden Pharmaceuticals, Inc.:

NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders
(the "Meeting") of Golden Pharmaceuticals, Inc. (the "Company") will be
held at the _______________________________________ on Friday, February 13,
1998 at 9:00 a.m. local time, for the following purposes:

(1) To elect 1 director to the Board of Directors.

(2) To consider a proposal to amend the Company's Articles of
Incorporation to effect a reverse stock split of up to
forty-for-one of the outstanding shares of the Company's common
stock with the authorized number of shares of common stock
remaining at 200,000,000 shares.

(3) To ratify the Board of Director's selection of Grant Thornton
LLP as the Company's independent auditors for the fiscal year
ending August 31, 1998.

(4) To consider such other matters as may properly come before the
Meeting and at any and all postponements, continuations or
adjournments thereof.

All holders of record of shares of the Company's no par value common
stock at the close of business on January 20, 1998 are entitled to notice
of and to vote at the Meeting or any postponements, continuations or
adjournments thereof. Any additional notice required pursuant to Article
113 of Title 7 of the Colorado Revised Statutes will be given or made in
compliance with said statute.

You are cordially invited and urged to attend the Meeting. All
Shareholders, whether or not they expect to attend the Meeting in person,
are requested to complete, date and sign the enclosed form of Proxy and
return it promptly in the envelope provided for that purpose. By returning
your Proxy promptly you can help the Company avoid the expense of follow-up
mailings to ensure a quorum so that the Meeting can be held. Shareholders
who attend the Meeting may revoke a prior Proxy and vote their Proxy in
person as set forth in the Proxy Statement.
3
THE ENCLOSED PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS OF THE
COMPANY. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THE
PROPOSED ITEMS.

By Order of the Board of Directors

Charles R. Drummond
Chairman of the Board of Directors

Golden, Colorado
Dated: January __, 1998
4
GOLDEN PHARMACEUTICALS, INC.
710 14TH STREET
GOLDEN, COLORADO 80401

------------------------------------

PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD FEBRUARY 13, 1998

------------------------------------

INTRODUCTION

This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors (the "Board") of Golden Pharmaceuticals, Inc. (the
"Company"), of proxies to be voted at the Annual Meeting of the Shareholders of
the Company to be held at the _________________________________________, on
February 13, 1998 at 9:00 a.m. local time and all postponements, continuations
or adjournments thereof (collectively, the "Meeting"). This Proxy Statement,
the accompanying form of proxy (the "Proxy") and the Notice of Annual Meeting
of Shareholders will be first mailed or given to the Company's Shareholders on
or about January 23, 1998.

All shares of the Company's no par value common stock (the "Shares")
represented by properly executed Proxies received in time for the Meeting will
be voted at the Meeting in accordance with the instructions marked thereon or
otherwise as provided therein, unless such Proxies have previously been
revoked. Unless instructions to the contrary are marked, or if no instructions
are specified, Shares represented by the Proxies will be voted for the
proposals set forth on the Proxy, and in the discretion of the persons named as
proxies, on such other matters as may properly come before the Meeting. Any
Proxy may be revoked at any time prior to the exercise thereof by submitting
another Proxy bearing a later date, by giving written notice of revocation to
the Company at the Company's address indicated above or by voting in person at
the Meeting. Any notice of revocation sent to the Company must include the
Shareholder's name and must be received prior to the Meeting to be effective.

VOTING SECURITIES

Only holders of record of Shares at the close of business on January
20, 1998 (the "Record Date") will be entitled to receive notice of and to vote
at the Meeting. On the Record Date, there were ____________ Shares
outstanding, each of which will be entitled to one vote on each matter properly
submitted for vote to the Shareholders at the Meeting. The presence, in person
or by Proxy, of holders of a majority of the outstanding Shares entitled to
vote at the Meeting constitutes a quorum for the transaction of business at the
Meeting.

Abstentions and broker non-votes are each included in the
determination of the number of Shares present and voting. Each is tabulated
separately. Abstentions are counted in the tabulations
5
of the votes cast on the proposals presented to Shareholders whereas broker
non-votes are not counted for purposes of determining whether a proposal has
been approved. An automated system administered by the Company's transfer
agent tabulates the votes cast by Proxy. Votes cast by proxy or in person at
the Meeting will be counted by the persons appointed by the Company to act as
election inspectors for the Meeting.

PROPOSAL NO. 1

ELECTION OF DIRECTOR

The Company's Articles of Incorporation, as amended, provides for a
board of directors made up of three classes. The members of each class serve
three-year staggered terms with one class to be elected at each annual meeting.
As provided in the Company's Bylaws, the Board has currently set the total
number of directors at five, with one director in Class A, and two directors in
Class B and in Class C. The current terms of the Class B and Class C directors
expire at the Company's annual meeting of shareholders in 1999 and 2000,
respectively. The current term of the Class A director expires at the Meeting.

The Board has nominated Ladd A. Drummond for election as a Class A
director to serve a three-year term expiring at the 2001 annual meeting of
shareholders and until his successor is elected and qualified.

It is intended that the Shares represented by properly executed
Proxies will be voted to elect the director nominee, unless authority to so
vote is withheld. The nominee is currently a member of the Board and has
indicated a willingness to serve as a director if re-elected. The Board has no
reason to believe that the director nominee will be unable to serve as a
director or becomes unavailable for any reason, the persons entitled to vote
the Proxy will vote, as such persons shall determine in his or her discretion,
for such substituted nominee, if any, nominated by the Board.

REQUIRED VOTE

The affirmative vote of a plurality of the shares present or
represented and entitled to vote at the Meeting is necessary to elect each
director nominee.

THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE TO GRANT AUTHORITY FOR
THE PROPOSAL TO ELECT MR. LADD A. DRUMMOND AS A DIRECTOR OF THE COMPANY FOR
THE DESIGNATED TERM.

DIRECTORS

The following table sets forth certain information with respect to the
director nominee and the directors who will continue in office after the
Meeting including the name and age of each director and nominee, his principal
occupation and business experience during the past five years and the
commencement of his term as a director of the Company.
6

NOMINEE FOR ELECTION

PRINCIPAL OCCUPATION OR EMPLOYMENT DURING THE PAST DIRECTOR
NAME AND AGE FIVE YEARS; OTHER DIRECTORSHIPS SINCE.
------------ ------------------------------- --------

Ladd A. Drummond (27) Director. Co-owner of Drummond Land and Cattle Company 1994
since January 1991; operator of risk management
and investment businesses.

DIRECTORS WHOSE TERM OF OFFICE WILL CONTINUE AFTER THE MEETING

PRINCIPAL OCCUPATION OR EMPLOYMENT DURING THE PAST DIRECTOR
NAME AND AGE FIVE YEARS; OTHER DIRECTORSHIPS SINCE.
------------ ------------------------------- --------

Charles R. Drummond (53) Chairman of the Board of Directors, Chief Executive Officer and 1991
Treasurer of the Company since 1992. Owner and operator of
Drummond Ranches, a cattle ranching operation in Pawhuska,
Oklahoma, since 1965. Partner in Drummond and Hull Oil
Company.

Arch G. Gothard III (51) Director. President of First Kansas, Inc. since October 1988. 1995
Mr. Gothard also serves as a director of First State Bank,
Kenco Plastics, Inc., LDI, Inc., Pay Phone Concepts, Inc. and
Collins Industries, Inc.

John H. Grant (54) Vice Chairman of the Board of Directors and Secretary. 1990
Professor of Business Administration, University of
Pittsburgh, Pennsylvania since January 1972.

Richard G. Wahl (60) Director. Owner and President of MRD Construction Incorporated 1993
since 1964. Mr. Wahl also serves as managing partner of both
G&W Construction, Evergreen, Colorado, and Willow Ridge
Conference Center, Morrison, Colorado.

Charles R. Drummond and Ladd A. Drummond are father and son. There
are no other family relationships between any of the directors and executive
officers of the Company.
7
BOARD MEETINGS

The Board held _____ (__) meetings and acted by unanimous written
consent on _____ (__) occasions during the fiscal year ended August 31, 1997
(the "Fiscal Year"). No director attended fewer than 75% of the aggregate of
(i) the total number of meetings of the Board during the Fiscal Year; and (ii)
the total number of meetings held by all committees of the Board on which he
served during the Fiscal Year.

COMMITTEES OF THE BOARD

EXECUTIVE COMMITTEE. The Board has an Executive Committee, and during
the Fiscal Year its members were Dr. Grant and Mr. Charles R. Drummond. The
Executive Committee has all of the authority of the entire Board to conduct the
business and affairs of the Company, except where action of the entire Board is
specified by statute. The Executive Committee met ___ times during the Fiscal
Year.

STOCK OPTION COMMITTEE. The Board has a Stock Option Committee and
during the Fiscal Year its members were Dr. Grant and Mr. Wahl. The Stock
Option Committee administers and interprets the Company's Performance Stock
Option Plan and has authority to determine which persons shall be granted
options under the Performance Stock Option Plan and the terms and conditions of
stock option grants. The Stock Option Committee met ____ times during the
Fiscal Year.

COMPENSATION COMMITTEE. The Board has a Compensation Committee and
during the Fiscal Year its members were Dr. Grant and Mr. Wahl. The
Compensation Committee performs the following duties: (i) considering and
making recommendations to the Board and the officers of the Company with
respect to the overall compensation policies of the Company; (ii) approving the
compensation payable to all officers of the Company; (iii) reviewing proposed
compensation of executives; (iv) advising management on all other executive
compensation matters as requested; and (v) reporting to the Board as and when
appropriate with respect to all of the foregoing. The Compensation Committee
met ___ times during the Fiscal Year.

AUDIT COMMITTEE. The Board has an Audit Committee and during the
Fiscal Year its members were Dr. Grant and Mr. Wahl. The Audit Committee's
duties include the following: (i) making recommendations to the Board as to the
selection of the firm of independent auditors; (ii) reviewing the results of
the annual audit of the Company with the independent auditors and appropriate
management representatives; (iii) reviewing with the independent auditors such
major accounting policies of the Company as are deemed appropriate for review
by the Audit Committee; and (iv) reporting to the Board the Audit Committee's
activities. The Audit Committee met ___ times during the Fiscal Year.

The Board does not presently have a separate nominating committee but
develops nominations for the Board as a whole.
8

COMPENSATION OF DIRECTORS

Directors who are not employees of the Company are entitled to $1,500
for each board meeting attended in person and $500 for each committee meeting
attended in person, plus reimbursement for travel and other expenses relating
to attendance at such meetings.

EXECUTIVE OFFICERS

Information is set forth below regarding the executive officers of the
Company, including their age, principal occupation during the last five years
and the date each first became an executive officer of the Company.

EXECUTIVE
PRINCIPAL OCCUPATION OR EMPLOYMENT OFFICER
NAME AND AGE DURING THE PAST FIVE YEARS SINCE.
------------ ---------------------------------- ---------

Charles R. Drummond (53) Chairman of the Board of Directors, Chief Executive 1991
Officer and Treasurer of the Company since 1992. Owner
and operator of Drummond Ranches, a cattle ranching
operation in Pawhuska, Oklahoma, since 1965. Partnerin
Drummond and Hull Oil Company since 1985.

Bruce A. Goldberg (51) President from March 1996 to present. Chief Operating 1994
Officer from February 1994 through 1996. Director of
Reagent Operation at Lifescan, Inc. from 1989 to 1994.

Gary P. Pryor (48) Vice President, Finance since July 1997. Chief Financial 1997
Officer at Johnston Sweeper Company from June 1995, to
June 1997, and Vice President, Finance, at Bicore
Monitoring Systems, Inc. from December 1991 to June 1995.

John H. Grant (54) Vice Chairman of the Board of Directors and Secretary. 1990
Professor of Business Administration, University of
Pittsburgh, Pennsylvania since January 1972.

Officers serve at the discretion of the Board and are elected at the
first meeting of the Board after each Annual Meeting of Shareholders.
9
EXECUTIVE COMPENSATION

The following table sets forth information concerning compensation
paid by the Company to the Chief Executive Officer and any other executive
officer whose total annual salary and bonus exceeded $100,000 for the last
fiscal year:

SUMMARY COMPENSATION TABLE

ANNUAL LONG-TERM
COMPENSATION COMPENSATION AWARDS
------------ SECURITIES ALL OTHER
UNDERLYING COMPENSATION
NAME & PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS/SARS (#) ($)
------------------------- ---- --------- --------- ------------------- ------------

Charles R. Drummond 1997 150,000 -0- -0- 24,000 (1)
Chairman, Chief Executive 1996 125,000 25,000 -0- -0-
Officer and Treasurer 1995 103,750 -0- -0- -0-

Bruce A. Goldberg 1997 104,000 -0- -0- -0-
President, GPI 1996 104,000 20,000 -0- -0-
1995 96,000 13,333 -0- -0-

(1) Living Allowance

The foregoing compensation table does not include certain fringe
benefits made available on a nondiscriminatory basis to all Company employees
such as group health insurance, dental insurance, long-term disability
insurance, vacation and sick leave. In addition, the Company makes available
certain non-monetary benefits to its executive officers with a view to
acquiring and retaining qualified personnel and facilitating job performance.
The Company considers such benefits to be ordinary and incidental business
costs and expenses. The aggregate value of such benefits in the case of the
executive officers and of the group listed in the above table, which cannot be
precisely ascertained but which is less than the lesser of (a) ten percent of
the cash compensation paid to each such executive officer or to the group,
respectively, or (b) $50,000 or $50,000 times the number of individuals in the
group, as the case may be, is not included in such table.
10
EMPLOYMENT AGREEMENTS. On September 1, 1991 the Company entered into
an employment agreement with Mr. Charles R. Drummond whereby Mr. Charles R.
Drummond was employed by the Company beginning on September 1, 1991 for a period
of three years or the termination of the employment agreement. Pursuant to the
terms of the agreement, Mr. Charles R. Drummond's duties are to act as
Chairman of the Board and Secretary of the Company. The agreement provides that
Mr. Charles R. Drummond will be paid an annual salary subject to periodic
increases from time to time at the sole discretion of the Board. The agreement
provides that Mr. Charles R. Drummond's employment with the Company may be
terminated for cause, as defined therein. If Mr. Charles R. Drummond's
employment is terminated without cause, the Company shall pay Mr. Charles R.
Drummond, in addition to amounts accrued during the respective periods prior to
such termination, severance pay in an amount equal to the amount of compensation
that would otherwise be payable to Mr. Charles R. Drummond under the agreement.
The Board and Mr. Charles R. Drummond have agreed to extend the employment
agreement on a year to year basis. Mr. Charles R. Drummond's salary for the
period of September 1, 1997, through August 31, 1998, will be $150,000 plus a
living allowance of $24,000.

In 1997, the Company entered into an employment agreement with John H.
Grant for a period of five years or until termination of the agreement. Mr.
Grant's duties include service as Vice Chairman of the Board at a minimum
annual salary of $95,000. He is currently being paid a salary of $105,000 per
year.

COMPENSATION PURSUANT TO PLANS

In October 1992, the Company adopted a Performance Stock Option Plan
(the "Plan"), approved by the shareholders, for the benefit of employees,
officers and directors of the Company, including the executive officers
referred to in the Summary Compensation Table. The Stock Option Committee of
the Board of Directors selects the optionee and determines the terms and
conditions of the stock option grants. As of August 31, 1997, options to
purchase 1,000,000 shares of common stock were outstanding pursuant to the
Plan. In addition, options to purchase an additional 1,000,000 shares of
common stock were outstanding as of August 31, 1997, pursuant to an option
agreement with Dornoch Medical Systems, Inc.

SECTION 16(a) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 and the rules
thereunder require the Company's officers and directors, and persons who own
more than ten percent of a registered class of the Company's equity securities,
to file reports of ownership and changes in ownership with the Securities and
Exchange Commission and with the NASDAQ and to furnish the Company with copies.

Based solely on its review of the copies of the Section 16(a) forms
received by it, or written representations from certain reporting persons, the
Company believes that, during the last fiscal year, all Section 16(a) filing
requirements applicable to its officers, directors and greater-than-ten-percent
beneficial owners were complied with except for the following:
11

Mr. Daniel Guinn did not file one (1) transaction for the most recent
fiscal year; Mr. Gary Pryor did not file a Form 3 upon becoming an officer of
the Company; Mr. Charles Drummond did not report one (1) transaction during the
most recent fiscal year; Mr. John Grant did not report three (3) transactions
during the most recent fiscal year; Mr. Richard Wahl did not report two (2)
transactions during the most recent fiscal year; Mr. Ladd Drummond did not
report two (2) transactions during the most recent fiscal year; and Mr. Arch
Gothard, III, did not report three (3) transactions during the most recent
fiscal year.

All the transactions described above will be reported on a Form 5 for
each officer and director.

PROPOSAL NO. 2

APPROVAL OF AN AMENDMENT TO THE COMPANY'S
ARTICLES OF INCORPORATION
TO EFFECT A REVERSE STOCK SPLIT

GENERAL

On August 11, 1995 and January 31, 1997 the Shareholders of the
Company approved an amendment to the Articles to effect a reverse split of up
to forty-for-one (the "Prior Splits"). The Board's authority to effect the
Prior Split, approved on August 31, 1995, terminated on August 11, 1996 and
will expire on January 31, 1998, with respect to Prior Split approved on
January 31, 1997. In each case the Board determined that the Prior Split was
not in the best interests of the Company during such time period. The Board
has adopted a new resolution approving the submittal to a shareholder vote of
an amendment to the Articles to effect a reverse stock split of up to
forty-for-one of the presently issued and outstanding Shares (the "Reverse
Stock Split"). The Reverse Stock Split will not alter the number of Shares
authorized for issuance which will remain at 200,000,000. The form of the
proposed amendment (assuming a forty-for-one split is effected) is attached as
Exhibit A.

If approved by the Shareholders, this proposal would allow the
amendment to be abandoned or the split to be reduced to something less than
forty-for-one by action of the Board at any time after the Meeting and prior to
the Effective Date (as defined below) if the Board determines in its sole
discretion that the proposed amendment and the Reverse Stock Split would not be
in the best interests of the Company or that a different ratio (but not greater
than forty-for-one) would be in the best interest of the Company. The Board's
authority to implement the Reverse Stock Split would terminate no later than
February 13, 1999.
12

PURPOSE AND EFFECTS OF THE REVERSE STOCK SPLIT

The Board believes that it would be in the best interests of the
Company and its Shareholders to effect the Reverse Stock Split. The Shares are
currently traded on the OTC Bulletin Board which is an electronic quotation
service which attempts to match buyers and sellers of eligible OTC securities.
The bid and ask prices of the Company's common stock as reported by the OTC
Bulletin Board on January 20, 1998, were $____ and $___, respectively. The
current low market price per share of the shares may impair the marketability
of the stock to institutional investors who often have restrictions on the
price levels of stocks in which the institution is permitted to invest.
Furthermore, many brokerage firms are reluctant to recommend or sell lower
priced stocks to their clients because of perceived risk and low commissions
or, in the alternative, extremely high commissions relative to the sales price
of the stock. Certain broker dealers, as a matter of policy, will not extend
margin account credit on low priced stocks. On the other hand, certain
investors are attracted to low priced stock because of its potential for
appreciation. The Board further believes that the Company's low per share
price creates a negative impression in the market with respect to the Company
and creates additional barriers to increasing the per share price.

The Board also expects that the Reverse Stock Split, if effected, will
decrease certain administrative expenses of the Company, due to fewer
authorized Shares actually being outstanding. This should reduce the expenses
of the transfer agent and may create additional savings from reducing mailing,
copying and other expenses associated with communicating with Shareholders.
However, there can be no assurance that administrative expenses will decrease
over time and, to the contrary, some additional expense can be anticipated in
the process of effecting the Reverse Stock Split.

The Board has also determined it to be in the best interests of the
Company and its Shareholders to seek to position the Company for eventual
listing on the NASDAQ SmallCap Market. The Company currently does not qualify
for admission to the NASDAQ SmallCap Market because, among other factors, its
per share price is too low, fewer than the requisite number of market makers
follow the Company and it cannot meet certain financial statement requirements.
One of the requirements for listing on the NASDAQ Small-Cap Market is a minimum
bid price of $_____; a price that may exceed the per share bid price after the
Reverse Stock Split is completed. The Board believes that having the Shares
listing on the NASDAQ Small-Cap Market will facilitate financing for future
acquisitions since many commercial lenders have policies against making loans
to companies listed on the OTC Bulletin Board. However, completion of the
Reverse Stock Split will not enable the Company to qualify for listing on the
NASDAQ SmallCap Market and further there can be no assurance that at such time
as the Shares are listed on the NASDAQ SmallCap Market that it would enable the
Company to obtain the additional financing.

There can be no assurance that the Reverse Stock Split will achieve
the desired results outlined above, nor can there be any assurance that price
per Share immediately after the Reverse Stock Split will increase
proportionately with the Reverse Stock Split or that any increase can be
sustained for a prolonged period of time.

The Company is presently authorized to issue 200,000,000 Shares of
which __________ were outstanding on January 20, 1998. The effect of the
Reverse Stock Split (assuming a forty-for-one split is effected) would be to
decrease the number of outstanding Shares to approximately ___________ and,
since
13
the number of Shares available for issuance will remain at 200,000,000, to
increase the number of Shares available for issuance from approximately
__________ to __________. Having the additional authorized but unissued Shares
would provide the Board with the flexibility and authority to issue such Shares
publicly or privately in connection with future financing or acquisition
transactions, or for other general corporate purposes, without further action
by the Shareholders of the Company, unless such action is required by law.

Although the Board has no present intention of doing so, the
additional authorized but unissued Shares could also be used by the Board to
defeat or delay a hostile takeover. Faced with an actual or proposed hostile
takeover, the Board could issue Shares, in a private transaction, to a friendly
party who might align themselves with the Board in opposing a hostile takeover.
Accordingly, the proposed amendment could be considered to have the effect of
discouraging a takeover of the Company. The directors are not aware, however,
of any current proposals by any party to acquire control of the Company and the
Reverse Stock Split is not intended to be an anti-takeover device.

The Reverse Stock Split would not affect any Shareholder's
proportionate equity interest in the Company except for the negligible effect
which would result from the payment of cash in lieu of fractional Shares. The
Reverse Stock Split would not effect the voting rights or other rights of the
holders of common stock. The Reverse Stock Split would have no material
federal tax consequences to the Shareholders of the Company.

FEDERAL INCOME TAX CONSEQUENCES

The following description of federal income tax consequences is for
general information only. Shareholders are urged to consult their own tax
advisor to determine the particular tax consequences to them, including the
application and effect of state, local and foreign tax laws. In general, the
exchange of Shares contemplated by the Reverse Stock Split would not result in
a Shareholder's recognition of gain or loss for federal income tax purposes.
If the Reverse Stock Split is approved and later effected, the tax basis of
Shares received as a result of the Reverse Stock Split (including any
fractional Share interests to which a Shareholder is entitled) will be equal,
in the aggregate, to the basis of the Shares exchanged pursuant to the Reverse
Stock Split. For tax purposes, the holding period of the Shares immediately
prior to the effective date of the Reverse Stock Split will be included in the
holding period of the Shares received as a result of the Reverse Stock Split.
Shareholders who receive cash in lieu of a fractional Share or who exercise
Dissenters' rights (as defined herein) will recognize capital gain or loss in
an amount equal to the difference between the amount of cash received and the
adjusted basis of the fractional Share surrendered for cash.
14

CERTIFICATES AND FRACTIONAL SHARES

If the proposed Reverse Stock Split is approved by the Company's
Shareholders, the Company will file an amendment to its Articles with the
Secretary of State of the State of Colorado prior to February 13, 1999. The
proposed Reverse Stock Split will become effective on the date of such filing
(the "Effective Date"). The certificates presently representing Shares will be
deemed to represent one-fortieth of the number of Shares on the Effective Date
(assuming a forty-for-one split is effected). New Shares will be issued in due
course as old Shares are tendered to the transfer agent for exchange or
transfer. No fractional Shares will be issued, and in lieu thereof,
Shareholders holding a number of Shares not evenly divisible by forty, and
Shareholders holding less than forty Shares, upon surrender of their old
certificates, will receive cash in lieu of fractional Shares. There are
currently _____ Shareholders of record of the Company. _________ Shareholders
of record, who own an aggregate of ___ Shares, will own less than 1 Share after
the Reverse Stock Split. Based on an assumed average bid and ask price of $___
per share, the cost to the Company of cashing out these fractional interests
would be $______. The price payable by the Company will be determined by
multiplying the fraction of a new Share by the average of the bid and ask
prices for one old Share for the ten business days immediately preceding the
Effective Date as reported by the OTC Bulletin Board. The price payable for
fractional interests may or may not be indicative of the actual value of such
interests due to the lack of an active trading market for the Shares.

DISSENTERS' RIGHTS

THE FOLLOWING SUMMARY DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF
DISSENTERS' RIGHTS UNDER COLORADO LAW AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO ARTICLE 113 OF THE COLORADO BUSINESS CORPORATION ACT, WHICH IS
ATTACHED HERETO AS APPENDIX A.

Pursuant to Article 113 of the Colorado Business Corporation Act (the
"CBCA"), holders of Shares whose ownership interest is reduced to a fraction of
a share or to scrip have the right to dissent from the proposal to effect the
Reverse Stock Split and receive "Fair Value" for their Shares. For purposes of
the Reverse Stock Split, a Dissenter is defined in the CBCA as a Shareholder
(i) who owns fewer than forty Shares, so that as a result of the Reverse Stock
Split, the Shareholder would be left with a fraction of a Share; and (ii) who
exercise the right to dissent according to the statutory provisions of Article
113 ("Dissenter"). "Fair Value," with respect to a Dissenter's Shares, means
the value of the Shares immediately before the Effective Date, excluding any
appreciation or depreciation in anticipation of the transaction, unless such
exclusion would be inequitable. Interest will accrue on the Fair Value from
the Effective Date to the date of payment at the average rate currently paid by
the Company on its principal bank loans or, if none, at the legal rate as
specified in Section 5-12-101, Colorado Revised Statutes.

Shareholders considering whether to assert Dissenters' rights should
note that the Fair Value of their Shares as determined under the CBCA could be
more than, equal to, or less than the consideration they would receive if they
did not elect to assert Dissenters' rights.

To assert Dissenters' rights, a Shareholder must comply with the
requirements of Article 113 of the CBCA. Specifically a Shareholder must: (i)
cause the Company to receive, before the vote is taken on the
15
Reverse Stock Split, written notice of the Shareholder's intention to demand
payment for the Shareholder's Shares; and (ii) not vote the Shares in favor of
the proposal. A Shareholder who does not satisfy these requirements will not
be entitled to demand payment for the Shareholder's Shares under Article 113 of
the CBCA.

If the Reverse Stock Split is authorized at the Meeting, the Company
will give a written Dissenters' notice (the "Dissenters' Notice") to all
Shareholders who complied with the requirements of Article 113 of the CBCA and
are entitled to demand payment for their Shares. The Dissenters' Notice will
be given no later than 10 days after the Effective Date. The Dissenters'
Notice will (i) state that the Reverse Stock Split was authorized and state the
Effective Date or proposed effective date of the Reverse Stock Split; (ii)
state an address at which the Company will receive payment demands ("Payment
Demands") and the address of a place where certificates for certificated Shares
must be deposited; (iii) inform holders of uncertificated Shares to what extent
transfer of the Shares will be restricted after the Payment Demand is made;
(iv) supply a form for demanding payment, which form will request a Dissenter
to state an address to which payment is to be made; (v) set the date by which
the Company must receive the Payment Demand and certificates for certificated
Shares, which date will not be less than 30 days after the date the Dissenters'
Notice is given; (vi) state that when a record Shareholder dissents with
respect to the Shares held by a beneficial Shareholder, such beneficial
Shareholder must certify to the Company that the beneficial Shareholder, and
the record Shareholder or record Shareholders of all Shares owned beneficially
by the beneficial Shareholder, have asserted, or will timely assert,
Dissenters' rights as to all such Shares; and (vii) be accompanied by a copy of
Article 113 of the CBCA.

A Shareholder who is given a Dissenters' Notice and who wishes to
assert Dissenters' rights shall, in accordance with the terms of the
Dissenters' Notice: (i) cause the Company to receive a Payment Demand, which
may be the payment demand form supplied with the Dissenters' Notice, duly
completed, and (ii) deposit the Shareholder's certificates for Shares. A
Shareholder who demands payment for the Shareholder's Shares retains all rights
of a Shareholder, except the right to transfer the Shares, until the Effective
Date, and will have only the right to receive payment for the Shares after such
Effective Date. Except as described below, the Payment Demand and deposit of
certificates are irrevocable. A Shareholder who does not make a Payment Demand
and deposit share certificates as required by the date or dates set in the
Dissenters' Notice will not be entitled to payment under Article 113 of the
CBCA.

A Shareholder entitled to dissent and obtain payment of the Fair Value
of the Shareholder's Shares under Article 113 of the CBCA may not challenge the
contemplated Reverse Stock Split, unless such transaction is unlawful or
fraudulent with respect to the Shareholder or with respect to the Company.

REQUIRED VOTE

The affirmative vote of holders of a majority of the Shares entitled
to vote at the Meeting is required to approve the proposed amendment to the
Articles to effect the Reverse Stock Split.

THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSAL TO
APPROVE THE AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION TO EFFECT THE
REVERSE STOCK SPLIT.
16

PROPOSAL NO. 3

RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS

The Board has selected Grant Thornton LLP to serve as independent
auditors of the Company for the fiscal year ending August 31, 1998.
Representatives of Grant Thornton LLP will be present at the Meeting and will
have an opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions from Shareholders.

Although it is not required to do so, the Board is submitting its
selection of the Company's independent auditors for ratification at the Meeting
in order to ascertain the views of Shareholders regarding such selection.
Whether the proposal is approved or defeated, the Board may reconsider its
selection.

REQUIRED VOTE

An affirmative vote of the majority of votes cast at the Meeting is
necessary to ratify the selection of Grant Thornton LLP.

THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE RATIFICATION
OF THE SELECTION OF GRANT THORNTON LLP AS INDEPENDENT AUDITORS OF THE COMPANY
FOR THE FISCAL YEAR ENDING AUGUST 31, 1998.
17
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding beneficial
ownership of outstanding shares of common stock as of December 31, 1997, by (i)
each person who is known by the Company to own beneficially more than five
percent of the outstanding shares of the Company's common stock, (ii) the
Company's directors, Chief Executive Officer and executive officers whose total
compensation exceeded $100,000 for the last fiscal year; and (iii) all
directors and executive officers of the Company as a group.

Shares
Name Beneficially Owned Percent of Class
- ---- ------------------ ----------------

Timothy E. Drummond(1) 14,833,748 12%
623 Kihekah
Pawhuska, Oklahoma 74056

Charles R. Drummond(1) 29,086,376 23%
710 14th Street
Golden, CO 80401

John H. Grant (1) 2,314,435 2%
710 14th Street
Golden, CO 80401

Richard G. Wahl(1) 2,503,421 2%
150 Buckboard, Box 1328
Edwards, CO 81632

Ladd A. Drummond(1) 14,723,828 12%
623 Kihekah
Pawhuska, Oklahoma 74056

Arch G. Gothard, III(1) 1,817,854 1%
Box 5950
Breckenridge, CO 80424

Bruce A. Goldberg(1) 6,400,000 5%
3000 West Warner Avenue
Santa Ana, CA 92704

All executive officers
and directors as a group
(nine persons)(1) 74,989,237 59%

(1) Shares are considered beneficially owned, for purposes of this table,
only if held by the person indicated, or if such person, directly or
indirectly, through any contract, arrangement, understanding, relationship or
otherwise has or shares the power to vote, to direct the voting of
18
and/or to dispose of or to direct the disposition of, such security, or if the
person has the right to acquire beneficial ownership within 60 days, unless
otherwise indicated.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In August 1995, the Company issued 2,000,000 shares of its common stock
to a corporation of which Mr. Charles R. Drummond is the sole shareholder in
order to have the Company released from a contingent liability. This matter
has been resolved and arrangements are being made to have the shares
transferred back to the Company.

In January 1997, the Company issued 2,000,000 shares of its common stock
to Daniel B. Guinn, President of QCP, as consideration for terminating an
employment agreement originally entered into July 9, 1995. The agreement
terminating the employment agreement was effective March 9, 1996, but the
common stock issued as consideration was not issued until January 1997.

The Company is due $70,127 from a related entity with common
shareholders and officers; $15,000 of the balance due was paid subsequent to
Fiscal 1997. The amount due the Company has been guaranteed by the
shareholders. The related shareholders are as follows: Charles R. Drummond,
Bruce A. Goldberg, and Arch G. Gothard, III, all of whom are officers or
directors of the Company.

Rx Direct, a subsidiary of the Company, subleases approximately 1,500
square feet at the Santa Ana, California, facility for $7,800 per year.

LOANS FROM SHAREHOLDERS AND DIRECTORS. During Fiscal 1997, and
subsequent to the end of Fiscal 1997, the Company obtained financing through the
issuance of notes payable to certain shareholders and directors of the Company.
The amounts outstanding through the issuance of these notes payable were
$615,000 ($575,000 payable to Charles R. Drummond; $40,000 payable to Arch G.
Gothard III) and $1,965,000 ($1,425,000 payable to Charles R. Drummond;
$540,000 payable to Arch G. Gothard III) at August 31, 1997, and November 30,
1997, respectively.

SOLICITATION OF PROXIES

This solicitation is being made by mail on behalf of the Board, but
may also be made without remuneration by officers or employees of the Company
by telephone, telegraph, facsimile transmission or personal interview. The
expense of the preparation, printing and mailing of the enclosed form of Proxy,
Notice of Annual Meeting and Proxy Statement and any additional material
relating to the meeting which may be furnished to Shareholders by the Board
subsequent to the furnishing of this Proxy Statement has been or will be borne
by the Company. The Company will reimburse banks and brokers who hold Shares
in their name or custody, or in the name of nominees for others, for their
out-of-pocket expenses incurred in forwarding copies of the Proxy materials to
those persons for whom they hold such Shares. To obtain the necessary
representation of Shareholders at the Meeting, supplementary solicitations may
be made by mail, telephone or interview by officers of the Company or selected
securities dealers. It is anticipated that the cost of
19
such supplementary solicitations, if any, will not be material.

ANNUAL REPORT

The Annual Report of the Company for the 1997 fiscal year has been
mailed to Shareholders along with this Proxy Statement. THE COMPANY WILL, UPON
WRITTEN REQUEST AND WITHOUT CHARGE, PROVIDE TO ANY PERSON SOLICITED HEREUNDER A
COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED AUGUST
31, 1997, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. Requests
should be addressed to the Corporate Secretary, 710 14th Street, Golden,
Colorado 80401.

OTHER MATTERS

The Company is not aware of any business to be presented for
consideration at the Meeting other than the matters described above. If any
other matters are properly presented at the Meeting, it is the intention of the
persons named in the enclosed Proxy to vote in accordance with their best
judgment.

SHAREHOLDER PROPOSALS

Any Shareholder proposal for the Company's 1999 Annual Meeting of
Shareholders must be received by the Company no later than October 16, 1998 in
order to be included in the Proxy materials of the Company for that meeting.
Such proposal should be sent to the Company, directed to the attention of its
Corporate Secretary, at the principal executive office of the Company, 710 14th
Street, Golden, Colorado 80401.

NOTICE TO BANKS, BROKER-DEALERS AND
VOTING TRUSTEES AND THEIR NOMINEES

Please advise the Company whether other persons are the beneficial
owners of the Shares for which Proxies are being solicited from you, and, if
so, the number of copies of this Proxy Statement and other soliciting materials
you wish to receive in order to supply copies to the beneficial owners of the
Shares.
20

IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE,
SHAREHOLDERS, WHETHER OR NOT THEY EXPECT TO ATTEND THE MEETING IN PERSON, ARE
REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT
PROMPTLY BY MAIL. NO ENVELOPE OR POSTAGE IS NECESSARY. BY RETURNING YOUR
PROXY PROMPTLY YOU CAN HELP THE COMPANY AVOID THE EXPENSE OF FOLLOW-UP MAILINGS
AND ENSURE A QUORUM SO THAT THE MEETING CAN BE HELD. SHAREHOLDERS WHO ATTEND
THE MEETING MAY REVOKE A PRIOR PROXY AND VOTE THEIR PROXY IN PERSON AS SET
FORTH IN THIS PROXY STATEMENT.

By Order of the Board of Directors

Charles R. Drummond, Chairman of the
Board of Directors
Golden, Colorado
January __, 1998
21
EXHIBIT A

Proposed Amendment to the Articles of Incorporation of Golden
Pharmaceuticals, Inc.

Article IV of the Articles of Incorporation is amended to read as
follows:

The aggregate number of shares that the Corporation shall have
authority to issue is 210,000,000 shares of stock, of which 200,000,000 shall be
Common Stock, no par value, and 10,000,000 shall be Preferred Stock, no par
value. Upon amendment to this Article to read as herein set forth, each forty
(40) shares of outstanding Common Stock is converted into and reconstituted as
one (1) share of Common Stock.
22
APPENDIX A

ARTICLE 113

DISSENTERS' RIGHTS

PART 1. RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES

Section 7-113-101. Definitions. For purposes of this article:

(1) "Beneficial Shareholder" means the beneficial owner of shares
held in a voting trust or by a nominee as the record Shareholder.

(2) "Corporation" means the issuer of the shares held by a
Dissenter before the corporate action, or the surviving or acquiring domestic
or foreign corporation, by merger or share exchange of that issuer.

(3) "Dissenter" means a Shareholder who is entitled to dissent
from corporate action under Section 7-113-102 and who exercises that right at
the time and in the manner required by part 2 of this Article.

(4) "Fair Value," with respect to a Dissenter's shares, means the
value of the shares immediately before the effective date of the corporate
action to which the Dissenter objects, excluding any appreciation or
depreciation in anticipation of the corporate action except to the extent that
exclusion would be inequitable.

(5) "Interest" means interest from the effective date of the
corporate action until the date of payment, at the average rate currently paid
by the corporation on its principal bank loans or, if none, at the legal rate
as specified in section 5-12-101, C.R.S.

(6) "Record Shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares
that are registered in the name of a nominee to the extent such owner is
recognized by the corporation as the Shareholder as provided in section
7-107-204.

(7) "Shareholder" means either a record Shareholder or a beneficial
Shareholder.

Section 7-113-102. Right to dissent.

(1) A Shareholder, whether or not entitled to vote, is entitled to
dissent and obtain payment of the Fair Value of his or her shares in the event
of any of the following corporate actions:

(a) Consummation of a plan of merger to which the
corporation is a party if:
23

(I) Approval by the Shareholders of that
corporation is required for the merger by section
7-111-103 or 7-111-104 or by the articles of
incorporation, or

(II) The corporation is a subsidiary that
is merged with its parent corporation under section
7-111-104;

(b) Consummation of a plan of share exchange to
which the corporation is a party as the corporation whose
shares will be acquired;

(c) Consummation of a sale, lease, exchange, or
other disposition of all, or substantially all, of the
property of the corporation for which a Shareholders' vote is
required under section 7-112-102(1); and

(d) Consummation of a sale, lease, exchange, or
other disposition of all, or substantially all, of the
property of an entity controlled by the corporation if the
Shareholders of the corporation were entitled to vote upon the
consent of the corporation to the disposition pursuant to
section 7-112-102(2).

(2) A Shareholder, whether or not entitled to vote, is
entitled to dissent and obtain payment of the Fair Value of the
Shareholder's shares in the event of:

(a) An amendment to the articles of
incorporation that materially and adversely affects rights in
respect of the shares because it:

(I) Alters or abolishes a preferential
right of the shares; or

(II) Creates, alters, or abolishes a
right in respect of redemption of the shares,
including a provision respecting a sinking fund for
their redemption or repurchase; or

(b) An amendment to the articles of
incorporation that affects rights in respect of the shares
because it:

(I) Excludes or limits the right of the
shares to vote on any matter, or to cumulate votes,
other than a limitation by dilution through issuance
of shares or other securities with similar voting
rights; or

(II) Reduces the number of shares owned
by the Shareholder to a fraction of a share or to
scrip if the fractional share or scrip so created is
to be acquired for cash or the scrip is to be voided
under section 7-106-104.

(3) A Shareholder is entitled to dissent and obtain
payment of the Fair Value of the Shareholder's shares in the event of
any corporate action to the extent provided by the
24
bylaws or a resolution of the board of directors.

(4) A Shareholder entitled to dissent and obtain payment
for the Shareholder's shares under this article may not challenge the
corporate action creating such entitlement unless the action is
unlawful or fraudulent with respect to the Shareholder or the
corporation.

Section 7-113-103. Dissent by Nominees and Beneficial Owners.

(1) A record Shareholder may assert Dissenters' rights as
to fewer than all the shares registered in the record Shareholder's
name only if the record Shareholder dissents with respect to all
shares beneficially owned by any one person and causes the corporation
to receive written notice which states such dissent and the name,
address, and federal taxpayer identification number, if any, of each
person on whose behalf the record Shareholder asserts Dissenters'
rights. The rights of a record Shareholder under this subsection (1)
are determined as if the shares as to which the record Shareholder
dissents and the other shares of the record Shareholder were
registered in the names of different Shareholders.

(2) A beneficial Shareholder may assert Dissenters'
rights as to the shares held on the beneficial Shareholder's behalf
only if:

(a) The beneficial Shareholder causes the
corporation to receive the record Shareholder's written
consent to the dissent not later than the time the beneficial
Shareholder asserts Dissenters' rights; and

(b) The beneficial Shareholder dissents with
respect to all shares beneficially owned by the beneficial
Shareholder.

(3) The corporation may require that, when a record
Shareholder dissents with respect to the shares held by any one or
more beneficial Shareholders, each such beneficial Shareholder must
certify to the corporation that the beneficial Shareholder and the
record Shareholder or record Shareholders of all shares owned
beneficially by the beneficial Shareholder have asserted, or will
timely assert, Dissenters' rights as to all such shares as to which
there is no limitation on the ability to exercise Dissenters' rights.
Any such requirement shall be stated in the Dissenters' notice given
pursuant to section 7-113-203.
25

PART 2. PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS

Section 7-113-201. Notice of Dissenters' Rights.

(1) If a proposed corporate action creating Dissenters'
rights under section 7-113-102 is submitted to a vote at a
Shareholders' meeting, the notice of the meeting shall be given to all
Shareholders, whether or not entitled to vote. The notice shall state
that Shareholders are or may be entitled to assert Dissenters' rights
under this article and shall be accompanied by a copy of this article
and the materials, if any, that, under articles 101 to 117 of this
title, are required to be given to Shareholders entitled to vote on
the proposed action at the meeting. Failure to give notice as
provided by this subsection (1) to Shareholders not entitled to vote
shall not affect any action taken at the Shareholders' meeting for
which the notice was to have been given.

(2) If a proposed corporate action creating Dissenters'
rights under section 7-113-102 is authorized without a meeting of
Shareholders pursuant to section 7-107-104, any written or oral
solicitation of a Shareholder to execute a writing consenting to such
action contemplated in section 7-107-104 shall be accompanied or
preceded by a written notice stating that Shareholders are or may be
entitled to assert Dissenters' rights under this article, by a copy of
this article, and by the materials, if any, that, under articles 101
to 117 of this title, would have been required to be given to
Shareholders entitled to vote on the proposed action if the proposed
action were submitted to a vote at a Shareholders' meeting. Failure
to give notice as provided by this subsection (2) to Shareholders not
entitled to vote shall not affect any action taken pursuant to section
7-107-104 for which the notice was to have been given.

Section 7-113-202. Notice of Intent to Demand Payment.

(1) If a proposed corporate action creating Dissenters'
rights under section 7-113-102 is submitted to a vote at a
Shareholders' meeting, a Shareholder who wishes to assert Dissenters'
rights shall:

(a) Cause the corporation to receive, before the
vote is taken, written notice of the Shareholder's intention
to demand payment for the Shareholder's shares if the proposed
corporate action is effectuated; and

(b) Not vote the shares in favor of the proposed
corporate action.

(2) If a proposed corporate action creating Dissenters'
rights under section 7-113-102 is authorized without a meeting of
Shareholders pursuant to section 7-107-104, a Shareholder who wishes
to assert Dissenters' rights shall not execute a writing consenting to
the proposed corporate action.

(3) A Shareholder who does not satisfy the requirements of
subsection (1) or (2)
26
of this section is not entitled to demand payment for the
Shareholder's shares under this article.

Section 7-113-203. Dissenters' Notice.

(1) If a proposed corporate action creating Dissenters'
rights under section 7-113-102 is authorized, the corporation shall
give a written Dissenters' notice to all Shareholders who are entitled
to demand payment for their shares under this article.

(2) The Dissenters' notice required by subsection (1) of
this section shall be given no later than ten days after the effective
date of the corporate action creating Dissenters' rights under section
7-113-102 and shall:

(a) State that the corporate action was
authorized and state the effective date or proposed effective
date of the corporate action;

(b) State an address at which the corporation
will receive payment demands and the address of a place where
certificates for certificated shares must be deposited;

(c) Inform holders of uncertificated shares to
what extent transfer of the shares will be restricted after
the payment demand is received;

(d) Supply a form for demanding payment, which
form shall request a Dissenter to state an address to which
payment is to be made;

(e) Set the date by which the corporation must
receive the payment demand and certificates for certificated
shares, which date shall not be less than thirty days after
the date the notice required by subsection (1) of this section
is given;

(f) State the requirement contemplated in section
7-113-103(3), if such requirement is imposed; and

(g) Be accompanied by a copy of this article.

Section 7-113-204. Procedure to Demand Payment.

(1) A Shareholder who is given a Dissenters' notice
pursuant to section 7-113-203 and who wishes to assert Dissenters'
rights shall, in accordance with the terms of the Dissenters' notice:

(a) Cause the corporation to receive a payment
demand, which may be the payment demand form contemplated in
section 7-113-203(2)(d), duly completed, or may be stated in
another writing; and
27

(b) Deposit the Shareholder's certificates for
certificated shares.

(2) A Shareholder who demands payment in accordance with
subsection (1) of this section retains all rights of a Shareholder,
except the right to transfer the shares, until the effective date of
the proposed corporate action giving rise to the Shareholder's
exercise of Dissenters' rights and has only the right to receive
payment for the shares after the effective date of such corporate
action.

(3) Except as provided in section 7-113-207 or
7-113-209(1)(b), the demand for payment and deposit of certificates
are irrevocable.

(4) A Shareholder who does not demand payment and deposit
the Shareholder's share certificates as required by the date or dates
set in the Dissenters' notice is not entitled to payment for the
shares under this article.

Section 7-113-205. Uncertificated Shares.

(1) Upon receipt of a demand for payment under section
7-113-204 from a Shareholder holding uncertificated shares, and in
lieu of the deposit of certificates representing the shares, the
corporation may restrict the transfer thereof.

(2) In all other respects, the provisions of section
7-113-204 shall be applicable to Shareholders who own uncertificated
shares.

Section 7-113-206. Payment.

(1) Except as provided in section 7-113-208, upon the
effective date of the corporate action creating Dissenters' rights
under section 7-113-102 or upon receipt of a payment demand pursuant
to section 7-113-204, whichever is later, the corporation shall pay
each Dissenter who complied with section 7-113-204, at the address
stated in the payment demand, or if no such address is stated in the
payment demand, at the address shown on the corporation's current
record of Shareholders for the record Shareholder holding the
Dissenter's shares, the amount the corporation estimates to be the
Fair Value of the Dissenter's shares, plus accrued interest.

(2) The payment made pursuant to subsection (1) of this
section shall be accompanied by:

(a) The corporation's balance sheet as of the end
of its most recent fiscal year or, if that is not available,
the corporation's balance sheet as of the end of a fiscal year
ending not more than sixteen months before the date of
payment, an income statement for that year, and, if the
corporation customarily provides such statements to
Shareholders, a statement of changes in Shareholders' equity
for that year and a statement of cash flow for that year,
which balance sheet and statements
28
shall have been audited if the corporation customarily
provides audited financial statements to Shareholders, as well
as the latest available financial statements, if any, for the
interim or full-year period, which financial statements need
not be audited;

(b) A statement of the corporation's estimate of
the Fair Value of the shares;

(d) A statement of the Dissenter's right to
demand payment under section 7-113-209; and

(e) A copy of this article.

Section 7-113-207. Failure to Take Action.

(1) If the effective date of the corporate action
creating Dissenters' rights under section 7-113-102 does not occur
within sixty days after the date set by the corporation by which the
corporation must receive the payment demand as provided in section
7-113-203, the corporation shall return the deposited certificates and
release the transfer restrictions imposed on uncertificated shares.

(2) If the effective date of the corporate action
creating Dissenters' rights under section 7-113-102 occurs more than
sixty days after the date set by the corporation by which the
corporation must receive the payment demand as provided in section
7-113-203, then the corporation shall send a new Dissenters' notice,
as provided in section 7-113-203, and the provisions of sections
7-113-204 to 7-113-209 shall again be applicable.

Section 7-113-208. Special Provisions Relating to Shares Acquired
After Announcement of Proposed Corporate Action.

(1) The corporation may, in or with the Dissenters'
notice given pursuant to section 7-113-203, state the date of the
first announcement to news media or to Shareholders of the terms of
the proposed corporate action creating Dissenters' rights under
section 7-113-102 and state that the Dissenter shall certify in
writing, in or with the Dissenter's payment demand under section
7-113-204, whether or not the Dissenter (or the person on whose behalf
Dissenters' rights are asserted) acquired beneficial ownership of the
shares before that date. With respect to any Dissenter who does not
so certify in writing, in or with the payment demand, that the
Dissenter or the person on whose behalf the Dissenter asserts
Dissenters' rights acquired beneficial ownership of the shares before
such date, the corporation may, in lieu of making the payment provided
in section 7-113-206, offer to make such payment if the Dissenter
agrees to accept it in full satisfaction of the demand.

(2) An offer to make payment under subsection (1) of this
section shall include

29
or be accompanied by the information required by section 7-113-206(2).

Section 7-113-209. Procedure if Dissenter is Dissatisfied With
Payment or Offer.

(1) A Dissenter may give notice to the corporation in
writing of the Dissenter's estimate of the Fair Value of the
Dissenter's shares and of the amount of interest due and may demand
payment of such estimate, less any payment made under section
7-113-206, or reject the corporation's offer under section 7-113-208
and demand payment of the Fair Value of the shares and interest due,
if:

(a) The Dissenter believes that the amount paid
under section 7-113-206 or offered under section 7-113-208 is
less than the Fair Value of the shares or that the interest
due was incorrectly calculated;

(b) The corporation fails to make payment under
section 7-113-206 within sixty days after the date set by the
corporation by which the corporation must receive the payment
demand; or

(c) The corporation does not return the deposited
certificates or release the transfer restrictions imposed on
uncertificated shares as required by section 7-113-207(1).

(2) A Dissenter waives the right to demand payment under
this section unless the Dissenter causes the corporation to receive
the notice required by subsection (1) of this section within thirty
days after the corporation made or offered payment for the Dissenter's
shares.

PART 3. JUDICIAL APPRAISAL OF SHARES

Section 7-113-301. Court Action.

(1) If a demand for payment under section 7-113-209
remains unresolved, the corporation may, within sixty days after
receiving the payment demand, commence a proceeding and petition the
court to determine the Fair Value of the shares and accrued interest.
If the corporation does not commence the proceeding within the
sixty-day period, it shall pay to each Dissenter whose demand remains
unresolved the amount demanded.

(2) The corporation shall commence the proceeding
described in subsection (1) of this section in the district court of
the county in this state where the corporation's principal office is
located or, if it has no principal office in this state, in the
district court of the county in which its registered office is
located. If the corporation is a foreign corporation without a
registered office in this state, it shall commence the proceeding in
the county in this state where the registered office of the domestic
corporation merged into, or whose shares were acquired by, the foreign
corporation was located.
30

(3) The corporation shall make all Dissenters, whether or
not residents of this state, whose demands remain unresolved parties
to the proceeding commenced under subsection (2) of this section as in
an action against their shares, and all parties shall be served with a
copy of the petition. Service on each Dissenter shall be by
registered or certified mail, to the address stated in such
Dissenter's payment demand, or if no such address is stated in the
payment demand, at the address shown on the corporation's current
record of Shareholders for the record Shareholder holding the
Dissenter's shares, or as provided by law.

(4) The jurisdiction of the court in which the proceeding
is commenced under subsection (2) of this section is plenary and
exclusive. The court may appoint one or more persons as appraisers to
receive evidence and recommend a decision on the question of Fair
Value. The appraisers have the powers described in the order
appointing them, or in any amendment to such order. The parties to
the proceeding are entitled to the same discovery rights as parties in
other civil proceedings.

(5) Each Dissenter made a party to the proceeding
commenced under subsection (2) of this section is entitled to judgment
for the amount, if any, by which the court finds the Fair Value of the
Dissenter's shares, plus interest, exceeds the amount paid by the
corporation, or for the Fair Value, plus interest, of the Dissenter's
shares for which the corporation elected to withhold payment under
section 7-113-208.

Section 7-113-302. Court Costs and Counsel Fees.

(1) The court in an appraisal proceeding commenced under
section 7-113-301 shall determine all costs of the proceeding,
including the reasonable compensation and expenses of appraisers
appointed by the court. The court shall assess the costs against the
corporation; except that the court may assess costs against all or
some of the Dissenters, in amounts the court finds equitable, to the
extent the court finds the Dissenters acted arbitrarily, vexatiously,
or not in good faith in demanding payment under section 7-113-209.

(2) The court may also assess the fees and expenses of
counsel and experts for the respective parties, in amounts the court
finds equitable:

(a) Against the corporation and in favor of any
Dissenters if the court finds the corporation did not
substantially comply with the requirements of part 2 of this
article; or

(b) Against either the corporation or one or more
Dissenters, in favor of any other party, if the court finds
that the party against whom the fees and expenses are assessed
acted arbitrarily, vexatiously, or not in good faith with
respect to the rights provided by this article.

(3) If the court finds that the services of counsel for
any Dissenter were of
31
substantial benefit to other Dissenters similarly situated, and that
the fees for those services should not be assessed against the
corporation, the court may award to said counsel reasonable fees to be
paid out of the amounts awarded to the Dissenters who were benefited.
32
PROXY

GOLDEN PHARMACEUTICALS, INC.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
GOLDEN PHARMACEUTICALS, INC.

The undersigned hereby appoints Charles R. Drummond and John H. Grant
and each of them, as proxies for the undersigned, each with the power to
appoint his substitute, and hereby authorizes them to represent and to vote, as
designated below, all shares of the no par value common stock of Golden
Pharmaceuticals, Inc. (the "Company") which the undersigned is entitled to vote
at the Annual Meeting of Shareholders of the Company to be held on February 13.
1998, or at any and all postponements, continuations or adjournments thereof
(collectively, the "Meeting").

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED TO GRANT AUTHORITY FOR THE ELECTION OF THE NOMINEES TO THE BOARD
OF DIRECTORS AND FOR EACH OF THE OTHER ITEMS SET FORTH ON THE PROXY.

(1) Proposal to elect the following nominee to the Board of Directors:

GRANT WITHHOLD
AUTHORITY AUTHORITY
Mr. Ladd A. Drummond [ ] [ ]

(2) Proposal to amend the Company's Articles of Incorporation to effect a
reverse stock split of its no par value common stock in a ratio not
to exceed forty-for-one.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

(3) Proposal for ratification of selection of Grant Thornton LLP as the
Company's independent auditors for the fiscal year ending August 31,
1998.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

(4) In the discretion of such proxy holders, upon such other business as
may properly come before the Meeting or any and all postponements,
continuations or adjournments thereof.
33
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders, dated January __, 1998 and the Proxy
Statement furnished therewith.

Please sign exactly as your name appears hereon. If a corporation, please sign
in full corporate name by president or other authorized officer. If a
partnership, please sign partnership name by authorized person. When signing
as a trustee, please give full title as such.

Dated , 1998
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Authorized Signature

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Title

Please mark boxes [x] in ink. Sign, date and return this Proxy Card promptly
using the enclosed envelope.